Brazilian Journal of Operations & Production Management 13 (2016), pp 160-172
FORMALIZATION OF REVERSE LOGISTICS PROGRAMS:
A THEORETICAL FRAMEWORK
Hui Hana; Eva Ponce Cuetoa
a
Technical University of Madrid (UPM) - Madrid, Espanha
ABSTRACT
Purpose - The main goal of this paper is to propose a theoretical framework that helps firms to implement a formalization
program to manage their returns. This research work proposes the theoretical framework that provides instructions for
firms’ formalization, with written rules and standard procedures, to better control their reverse logistics process.
Design/methodology/approach - The framework proposed covers all the stages in reverse logistics process, from return
collection to sorting and treatment processes. The theoretical model is proposed according to existing studies and literature
resources. Our approach focuses on theoretical and methodological considerations. We posit that formalized RL process
will help firms to realize their goals by facilitating a more efficient flow of goods from the point of consumption to the point
of origin.
Findings - Formalization would enable firms to profitably handle their reverse logistics operations, especially when returns
involve a number of uncertainties such as increasing volume of returns, the unstable time, and different types/conditions
of returned products. The framework proposed helps companies to formalize every single process and improve reverse
logistics effectiveness.
Research limitations/implications - This paper is limited to theoretical and methodological considerations. As a future
research, we suggest to focus on a quantitative empirical study that proposes relationships between the degree of process
formalization and reverse logistics program performance.
Practical implications - Companies can effectively structure their reverse logistics activities following a formalization system
based on the theoretical framework proposed in this paper.
Originality/value - An original theoretical framework to help companies formalize their reverse logistics programs is
proposed in this paper. This is especially helpful when companies receive highest volume of returns.
Keywords: Theoretical framework; Formalization; Reverse logistics
ABEPRO
DOI: 10.14488/BJOPM.2016.v13.n2.a3
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1. INTRODUCTION
The ability to manage returns has become a critical
success factor for many companies. The advance of
e-commerce, liberal returns policies or more flexible returns
policies, are increasing the volume of returns generated.
Return rates vary widely by product category, by season,
and across global markets (Guide et al.,2006). For example,
large traditional retailers, such as Home Depot, can have
return rates of 10% of sales or even higher due to liberal
returns policies (Guide et Van Wassenhove, 2009). In the
fashion apparel industry, this rate could increase up to
35%. Returns percentages are also typically much higher
for catalog sales and online sales (Guide et al.,2006). Lack
of formal policy and procedures reduce reverse logistics
effectiveness (Rogers et al.,2002), and formalization could
help firms to improve their capabilities in managing reverse
logistics flows. Therefore, the formalization of these
procedures becomes a necessity for establishing a state-ofthe-art reverse logistics (RL) process.
According to an investigation into open standards
benchmarking in logistics conducted by the APQC
(American Productivity and Quality Center), 70 percent of
responding organizations have built returns management
practices. Nearly one-third of respondents have no returns
management process at all (see Figure 1). Most replying
companies which deal with returns point out that their
implementations are effective to some degree. However,
11 percent of respondents indicate that their returns
operations are not effective (APQC, 2015). So the related
question “What formal guidance can help organizations
effectively manage returns processes?” becomes extremely
crucial for both practitioners and academics alike.
Figure 1. Implementation and effectiveness of returns management
practices
trend of e-commerce, the rising in returned products has
prompted many firms to endeavor to formalize their RL
processes. For example, the average e-commerce return
rates are between 20 to 30 percentages (Fabrikant, 2013).
Having a formalized RL process supports companies to
suitably respond customer expectations regarding returns
(Huscroft et al.,2013). Generally, formalization of reverse
logistics can improve firm efficiency, because standardizing
repetitive activities eliminate the need to treat every event
as a new decision. The benefit is particularly obvious among
companies, which fiercely compete on the basis of customer
service in the modern marketplace (Cottrill, 2003; Merritt,
2001).
The beneficial impact of formalized returns is gaining a
widespread recognition from academics and practitioners
(Daugherty, 2011; Stock et Boyer, 2009; Sachan et Datta,
2005; Tibben-Lembke, 2002). The lack of formalized
processes may restrain RL effectiveness. However, while
returns volume may be hard to predict, and the components
of a RL system, i.e., disposition decisions regarding returned
goods may be difficult to determine. Thus reverse logistics
would seem to be an ideal candidate for developing
formalized programs (Autry, 2005).
The main goal of this paper is to propose a theoretical
framework to help companies formalize their reverse
logistics programs. This framework is especially needed
when companies receive highest volume of returns, helping
them to formalize every single process, from returns
collection to sorting and treatment processes (Bernon et
al.,2011).
This paper is organized as follows: Section 2 includes the
formalization concept, and the main characteristics, benefits
and disadvantages of the RL formalization process; In
Section 3 the theoretical framework proposed in this paper
is developed; Section 4 outlines the relevant managerial
implications; and finally, conclusions and future research
lines are presented in Section 5.
2. LITERATURE REVIEW IN FORMALIZATION
Source: APQC (2015)
Formalized program contains a wide range of clearly
defined accountability, standardization of processes
and procedures, and sufficient knowledge to effectively
implement the reverse practices (Huscroft, 2010)
particularly as environmental, legal, and customer service
requirements increase throughout the marketplace (Guide
Jr, Souza et al. 2006. Nowadays with the overwhelming
More and more researchers are noticing the importance
of formalization in reverse logistics, and the research
contributions on this topic are increasing since 1985.
Practitioner perspectives (Sachan et Datta, 2005; Stock
et Boyer, 2009) and also relevant scientific researchers
(Daugherty, 2011; Tibben-Lembke, 2002) point out that
formalization is necessary for managing all aspects of the
reverse logistics, including the returns activities and relevant
services for customers (Genche et al.,2011). The rise in
commercial returns (exceeded $100 billion annually in the
United States) has prompted many companies to work to
formalize their reverse logistics processes in recent years
(Malone, 2004; Stock et al., 2002).
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2.1. Definition
The formalization term was first described by Pugh et al.,
(1968) in page 75 as: “Formalization denotes the extent to
which rules, procedures, instructions, and communications
are written”.
According to Ruekert et al., (1985) formalization focuses
more on control mechanisms such as rules, processes, or
procedures guide intra-firm or inter-firm operations. In
addition Price et al., (1980) also describe formalization
as control mechanisms which take the form of written
regulations or contractual obligations.
Table 1. Main contributions of formalization process based on the
literature review
Content of Main
Contributions
Literature
Benefits of
Formalization
Efficiency
Ruekert et al., 1985; Walker
et Ruekert, 1987; Bowersox et
Daugherty, 1992; Bowersox et al.,
1992; Richey et al., 2005; Autry,
2005
Improve Service
Level
Walsh et Dewar, 1987; Genche, 2007
However, some other researchers highlight that
formalization can be implemented with such tools as
articulated and/or written policies, job descriptions and
roles, organizational-responsibility charts, strategic and
operational plans, objective setting systems, standardization
of processes, and formalized communication systems, both
intra and inter-firm et al.,2011; John et Martin, 1984; Robert
Baum et Wally, 2003; Schwenk et Shrader, 1993).
Better Control of
Operations
Eisenhardt, 1985; Dahlstrom et
Nygaard, 1999
Reduce
Ambiguity and
Uncertainties
Davenport et Beers, 1995; Yeung,
2008
Streamline RL
Operations
Norek, 2002; Rogers et TibbenLembke, 1999; Aitken et Harrison,
2013
Decrease Costs
Genchev et al., 2011; Richey et al.,
2005a, 2005b; Sine et al., 2006
Meilich (2005) gives a more concise definition where
formalization refers to the agreed-upon written rules and
procedures involved in certain organizational processes and
related activities. Furthermore Genche et al., (2011) almost
give the same description of formalization as the agreedupon written rules and procedures regarding a particular
business operation.
Disadvantages of
Formalization
Eisenhardt, 1985
Compare
Benefits and
Disadvantages
Bowersox et al., 1992; Norek, 2002;
Rogers et Tibben-Lembke, 1999
Formalization
Scales and
Measurement
Items
Ferrell et Skinner, 1988; Dahlstrom
et Nygaard, 1999; Ayers et al., 1997;
Sohi et al., 1996; Dahistrom et al.,
1996; Baum et Wally, 2003; Song et
Parry, 1993
Relationship
between
Formalization and
Control
Papadakis et al., 1998; Genchev et
al., 2011; Welker et Vries, 2005”
Formalization becomes a primary characteristic of
standard process system. While control differs from
formalization is that control reveals the whole standard
process system according to internal firm context. Level
of formalization is indicative of how much control a given
organization has over its returns management practices.
Thus, the issue of control becomes associated with the
formal development and implementation of written policies,
rules, as well as procedures related to reverse logistics
(Genche et al.,2011).
2.2. Overview of current research
Practitioners and academics have studied formalization
from different aspects. Table 1 summarizes the main
contributions covering formalization issues ranging from
its characteristics to its benefits and disadvantages, which
is based on the overview of the most relevant from the
academic scientific papers in this relevant area.
Source: The authors own
Formalization measurement items, which exist as
general formalization scales, served as the necessary
sourcing component for specific reverse logistics process.
We list these authors who studied such scales adapted
to the reverse logistics context (Genche et al.,2011). For
example, Baum et Wally (2003) use standard operating
procedures (SOP) to deal with routine problems.
Formalization is starting to attract the attention of
researchers because of its advantages to business. Main
benefits for companies that adopt formalization are
summarized in Table 2.
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Table 2. Benefits of formalization in reverse logistics operations
Benefits
Efficiency
Brief Description
Formalization of internal operations
increased the efficiency by the use of
standards operating procedures and
rules. External operations are also
formalized (e.g. contracts with other
actors)
Better Control Formalization helps to monitoring the
of Operations system and contribute to a better control
Streamlining Formalization helps to rationalize and
RL operations simplify the RL operations.
Reduce
Ambiguity
and
Uncertainty
Formalization helps to know exactly
the procedure to manage the returns
flow, which contributes to reduce
various uncertainties (relating to the RL
program) and ambiguity
Decrease
Costs
Formalization system provides
instructions to customers specifying
how to return their products, ways to
be shipped, who pays for the shipping
costs, and where to return merchandise.
To have a clear process reduce time and
cost along the process
Improve
Service Level
Formalization simplifies complex
business programs and helps companies
to improve relationships with customers.
Source: The authors own
Potential disadvantages of formalization could be: the
reduction of operational flexibility, since it is mandatory to
follow the procedures and the rules; inhibit innovation, since
it is necessary to follow the process defined (Eisenhardt,
1985); and finally it could generate paperwork and a lot of
administrative tasks.
Research on formalization in logistics contexts suggests
that the benefits outweigh the potential drawbacks
(Bowersox et al.,1992). The same is true in reverse logistics:
the potential of formalization to help managers “make order
out of chaos” in returns is substantial (Norek, 2002) and can
be a valuable tool in streamlining reverse logistics operations
(Rogers et Tibben-Lembke, 1999).
3. THEORETICAL FRAMEWORK FOR REVERSE LOGISTICS
FORMALIZATION
Scientific literature reviewed in Section 2 indicates
that formalization is a necessary program for managing
effectively all stages of reverse logistics including returns
collection, sorting and treatment processes. In order to help
firms better control their reverse logistics flows, we propose
a theoretical framework to formalize their reverse logistics
process and operations. Figure 2 summarizes the theoretical
framework for implementing a formalization process in
reverse logistics. The framework proposed is a general
framework that includes different types of returns (e.g.
commercial returns, product recalls, warranty returns, endof-use returns, end-of-life returns, and reusable articles) and
different actors and companies involved in the collection
process (e.g. third-party logistics operators, retailers,
manufacturers, distributors, resellers).
We divide the whole reverse logistics processes into
returns initiation (1), transporting returns to collection points
(2), receiving returns at collecting points (3), inspecting
and sorting them (4) and treating returns (in-house (6) or
outsourcing (7)). In the returns treating facilities, there are
two main operations: inspection/separation procedure (4)
and re-processing procedure (5). Finally related activities
also include (8) feeding back the customer/supplier and (9)
measuring formalization performance of reverse logistics
progress (see Figure 2) (Rogers et al., 2002). According to
formalization definition, every procedure is offered with
detailed instructions, which serve as formalization tools for
companies to follow.
Returns initiation, transporting returns generated to
collection points, receiving returns at collecting points,
inspection/separation procedure, re-processing procedure,
feeding back the customer/supplier and measuring
formalization performance are considered multidimensional
processes (Rogers et Tibben-Lembke, 2001; Rogers et
al.,2002).
The formalization of reverse logistics processes can
provide a solid structure for achieving substantially different
capabilities and enhancing performance (Genche, 2007).
The current research proposes that how to manage reverse
logistics flows effectively needs a more strategic level with
formalized rules at each stage of the returns procedures
(Bernon et al.,2011).
Following sections describe in detail the procedure
and instructions proposed for each stage identified in this
theoretical framework.
3.1. Formalization for return initiation
Return initiation is defined as the process where
customers seek returns approvals from companies or send
the returns directly to returns centers (Rogers et al.,2002).
Establishing and developing a formal return initiation
process enhances returns visibility and helps firms become
more responsive (Sciarrotta, 2003). The uncertain in the
reverse logistics operation will be limited when returns
activities are formalized. Figure 3 shows the formalization
for this first stage in the reverse logistics process.
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Figure 2. Theoretical framework for formalization in Reverse logistics
Source: The authors own
Figure 3. Formalization for return initiation
Source: The authors own
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A variety of communication options are available for
customers initiating a return authorization (RA) request, i.e.,
24/7 artificial service call, easy-to-use online tool, physical
customer service sites and fax. Organizations should be
familiar with customers’ preferences. Then customers with
request for returns should follow a formal procedure to
fill electronic profiles. These electronic profiles generally
comprise product specifications (invoice number, quantity,
invoice date, the unit price, the customer reference number,
and the product serial number) and the reasons for the
return. Other specific customer requirements like crediting
and disposition options are also registered. Besides firms
should expand their abilities to afford customers with much
more precise information about returns turnaround times.
Consequently, a formal returns policy in terms of initiating
returns should clearly identifies roles and responsibilities for
both companies and customers (Genche, 2007).
3.2. Formalization for transporting returns
The second formalized stage of reverse logistics process
refers to physical movement from points of consumption
to returns collecting points. In a typical reverse channel,
customers initiate the returned products and collection
parties (manufacturers, retailers, wholesalers, distributors,
agents, resellers and third-party logistics providers) receive
and pre-process the returns. In the second stage, accurate
responsibilities should be authorized for transmitting the
returned merchandises back following return assignation.
Formal agreement among these institutions involved is
necessary to streamline RL operations. Once formalized
policy is in place, firms can concentrate on designing easyto-use and clean-cut routing procedures. For example,
companies can issue pre-printed transporting labels (i.e.,
SmartLabel) that specify the contracted carrier(s) and the
exact destination for accepting the return goods. Firms can
also assign specific routing regulations that contain location,
timing, carrier selection requirements, the returns condition,
etc., as a previous consensus discussed with business
partners (See Figure 4 for the detailed sets). Compliance
with formalization policy helps firms improve returns flow
visibility and better transportation planning (Genche, 2007).
The second formalized procedure involved in reverse
operations decides the form of transportation and
destination of the returned merchandises (Rogers et
al.,2002). Formal shipping guidelines should be established
for both external and internal participants. There are two
potential options for customers to return their goods. The
first routing option is the selling firm itself responding for
shipping the returned product, and customers formally
engage in the routing decision. Routing policies should
clearly demonstrate that the choice of carriers can affect
Figure 4. Formalization for transporting returns
Source: The authors own
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the time for returns processing and granting credit, as well
as guide customers to compliance with the pre-determined
procedure. Then a formal shipping schedule related to the
return should be assigned to every customer. Because the
massive array of routing possibilities can be confusing for
customers unless formal guidance is afforded by the selling
company. For instance, depending on the size or weight of
the return as well as specific service level agreements (same
day delivery versus three working days delivery), different
carriers can be selected. DHL, for example, can deliver only
small package returns for one to two working days while
FedEx Freight specializes in heavy weight returns, both by
air and ground. The second potential option is customers
charging with responsibility for returning products back.
Although the selling firm is not responsible for shipping
freight, it should remain proactive in suggesting different
options to costumers, as most of them may have little
transportation expertise or experience. Selling companies
should list specific attributions of diffident carriers with
formalization guidance and communicate with customers
in advance before transporting the returns (Genche, 2007).
3.3. Formalization for receiving returns
The third formalized procedures related to returns
is quite challenging because of the large number of
customer requirements and intra-firm processing rules. The
formalization of these activities (see Figure 5 for the detailed
sets of formalization) helps returns recipients reduce the
level of complexity and streamlines returns processing.
When companies receive the returns, they must have well
trained personnel and formal processes to quickly respond
how to recover more value from returned products (Hazen
et al.,2012; Skinner et al., 2008). The level of formalization
can impact costs, inventory levels, and returns processing
time. In addition, there should be formal contracts (returns
allowance, responsibilities, agreed negotiation rules, etc.)
among these collecting participant organizations.
3.4.Formalization for inspecting/separating returns
Returns cover a number of unknowns such as volume
of returns, the time, and type/condition of returned
Figure 5. Formalization for receiving returns
Source: The authors own
Figure 6. Formalization for inspecting/separating returns
Source: The authors own
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product. A physical check of the returned products follows
after receiving them. Inspection is necessary to verify
whether customers’ descriptions are in accord with the real
physical conditions of the returns. Typically, the inspector
has all the return-related information (electronic profile
about customer RA request) from the customer service
department. Consequently, the inspection refers to a stepby-step comparison between the electronic profile on the
screen plus the accompanying documentation and the entity
of returned product. Formalizing the verified procedure
(see Figure 6 for the detailed sets of formalization) would
help firms respond fast and appropriately with customers´
requirements avoiding discrepancies (Genche, 2007).
With the advent of increased legislation, many businesses
start to formalize their separation progress to comply with
the license regulations. Legislation is mandatory for firms
to accept these back after the end-of-life (EOL) or end-ofuse (EOU). For instance, the Waste Electrical & Electronics
Equipment directive encourages a set of criteria for
collection, treatment and recovery of waste electrical and
electronic equipment and makes producers responsible
(WEEE, 2012). There has also been a restriction on the use
of hazardous substances in the production processes, which
facilitates the dismantling, and recycling of waste electronics
(Ravi et al., 2005). A reverse logistics decision for the EOL
computers should ensure that the end-of-life products are
retired in a way that is compliant with existing legislation.
The European Union (EU) directive on EOL vehicles requires
automakers by 2006, to reuse or recycle 85% of an EOL
automobile’s weight and 95% by 2015 (Toffel, 2003).
3.5. Formalization for re-processing returns
This formalized procedure designates appropriate
disposition options for the returned merchandises. There is a
list of major disposition options: direct reuse (return to stock,
resale and donate), repair, refurbishing, remanufacturing,
cannibalization, recycling and incineration/landfilling. If
returned goods cannot be redistributed as new, it may be
necessary to re-process them or outsource the re-processing
operation to a third party. Donating the returns to charity
may also be a plausible disposition alternative. Various
options involved in choosing the appropriate disposition
require careful formalization consideration. The trade-offs
involved make this procedure one of the most complicated
in returns formalization. Formalized approach (see Figure
7 for the detailed sets of formalization) enables reduce
ambiguity and uncertainty, speed up the process, and obtain
the maximum residual value (Genche, 2007).
The existence of so many disposition options requires
formal analytical procedures. Assigning pre-disposition
codes to processed returns helps firms make fast and
accurate decisions for disposition options (Rogers et
al.,2002). Formal cost-benefit analysis is also necessary
when processed returns are on resale. Accompanying with
e-commerce, many companies create and maintain a direct
sales web-site for online re-selling operation. Formalized
disposition options would enable profitably manage the
returns (Genche, 2007). A detailed set of disposition rules
can improve an organization’s asset recovery and reduce its
inventory, which in turn reduces inventory-carrying costs
and labor costs associated with product storage (Partida,
2011).
3.6. Formalization for treating returns in-house
Having a formalized program may aide in the
improvement of returns in-house systems. If employees
know how the treating process is supposed to work, it
would make employees work more efficiently. Therefore
proper formalization rules can be used to ensure the reverse
logistics process is executed appropriately by the employees
in the process of treating returns in-house (Huscroft, 2010)
particularly as environmental, legal, and customer service
requirements increase throughout the marketplace (Guide
Jr, Souza et al. 2006. We supply formalized instructions in
details as below:
Figure 7. Formalization for re-processing returns
Source: Compiled from Thierry et al. (1995), Genche et al. (2011)
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Table 3. Formalization for treating returns in-house
Procedure
In-house
Formalization
– Formal work instructions
– Sequence of information process
activities
– Information system for administrative
order processing and production control
– Job descriptions
– Formalized hierarchical structure
– Formalized consultative structure
Source: The authors own
3.7. Formalization for treating returns outsourcing
Selecting disposition may refer to a decision to outsource
(in addition to returns routing). Customer requirements,
governmental regulations, and social responsibilities usually
prompt firms to adopt authorized third-party logistics
providers, which specialize in customized disposition. For
instance, firms must be certified to handle electronic waste,
and acquiring such certification can be extremely costly.
Therefore companies may opt to outsource the returns
treating procedure instead of incurring the expense (Genche
et al.,2011). More details are shown in Table 4.
Table 4. Formalization for treating returns outsourcing
Procedure
Formalization
– Aid the return process (scheduling the
Outsourcing pickup and transportation)
(contracts
– Collect customer information
with third
– Track the status of returned items
party
– Value added services
logistics
providers)
– Waste handling
Source: The authors own
We especially mention the third-party logistics (3PL).
While recognizing the importance of reverse logistics,
companies and especially e-businesses are increasingly
outsourcing their reverse logistics efforts to 3PL providers.
On the one hand, reverse logistics could be extremely
complex and very important. On the other hand, many
firms have limited resources. Outsourcing reverse logistics
operation to 3PL is optimal choice for them (Cottrill, 2000;
Krumwiede and Sheu, 2002).
3.8. Formalization for feeding back customer/supplier
This formalized procedure refers to the feedback to the
buyer’s requirements including credit authorization and
potential claim settlements with customers (i.e. repairing).
Because of customer satisfaction involved in this process,
the returns policy and the service level agreements with
individual customer play an important role (Rogers et al.,
2002).
Fast feedback is one of the highest priorities from
customers’ perspectives. Taking charge-backs for example,
no matter how efficient a reverse logistics program, the
relationship can be compromised if customer don´t receive
their money back promptly. Customers should be informed
the needed time for resolving the issues, and possible
compensation if deadlines are not met. Clear guidelines are
necessary for handling charge-backs within the firm as well.
Finance departments must keep pace with any customer´s
requirements for deductions, discounts, or short-term
credits against existing invoices (Genche, 2007).
If an exchanged product is sent back to the customer,
it must be the same model or of equivalent quality,
performance, and functionality. In the event that no such
product exists, a monetary credit may be issued to the
customer (Lambert et al.,2011).
If it is a warranty return, formal rules and procedures
are established in terms of time and documentation
requirements for repairing. Clear guidelines as to how long
it will take for repairing should be developed and formally
communicated to customers.
Keeping the customer informed can enhance customer
relationships. Having a formalized feedback allows firms to
properly manage customer expectations regarding returns
(Autry, 2005; Genchev et al.,2011).
3.9. Measurement with performance metrics
A metric is defined as a measure of product or process
performance (Hahn et al.,2008). Overseeing the reverse
logistics operations requires the constant monitoring of
the process. The tool that managers utilize is performance
metrics; they track, monitor, and report the status and
results of formalization in reverse logistics processes. For
instance, does formalization reduce costs of returns? Does
formalization enhance levels of customer satisfaction? Does
formalization interact with incentive systems to bolster
shareholder commitment (Huscroft et al.,2013)? The
process of measuring returns formalization performance is
aimed at improving reverse logistics quality and identifying
potential problem areas. The following metrics were the
most important reverse logistics indicators to measure
formalization performance, which are used by Hall et al.,
(2013) to state goals for organization’s inbound reverse
logistics processes.
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Table 5. Metrics for reverse logistics
Components
Sets
Customer satisfaction level
Customer wait time
Return cycle time
Volume of returns
Metrics
Type/condition of returned product
Cost of returns
Return rates
Return value
Credit processing
Source: Hall et al. (2013)
In-depth analysis of these metrics can help to identify
problem areas. For example, if a particular customer is
constantly abusing the returns policy, this will be apparent
when volume of returns and percent of sales data are
analyzed. The constant controlling feedback between
returns formalization operations and pre-established
performance metrics allows for continuous process and
program improvement (Genche, 2007).
4. MANAGERIAL IMPLICATIONS
The more formalized reverse logistics processes become,
the more performance gains (such as reduced inventory
investment or increased profitability) yield by returns
handling capabilities. We provide implications for managerial
practices to the efficient and effective of formalization.
First, one of the most difficult tasks regarding returns
management is to develop awareness among senior
managers of the importance of formalized reverse logistics,
and obtain support from them with additional support by
cross-functional teams. Managers should come to realize that
formalized handling of reverse logistics could bring social and
economic benefits. Furthermore, managers should request
feedback from both employees and customers to assess
the viability of the policies from a practical standpoint, and
should insure that reverse logistics policies are consistent
with firm strategic goals (Autry, 2005).
Secondly, responsibilities are set for returns policy
and returned programs (initiating returns, transporting
returned products, receiving returns at collecting points
and treating returned merchandises, accounting, sales,
finance, marketing), in order to increase the efficiency
and effectiveness of formalization in reverse logistics
(Genche, 2009). The organizations should place ultimate
accountability for returns management at the field level.
Besides, the organizations should also have full-time
employees responsible for reverse logistics (Partida, 2011).
Finally, to develop formal written policies and procedures,
relatively moderate investment is required in terms of
time and resources. Several potential investment parts
need practitioners to explore such as internal and global
transparency, flexibility in changing controls, reducing
complexity, widespread process control and collaborating
with supply chain partners.
5. CONCLUSIONS AND FUTURE RESEARCH
The theoretical framework proposed in this paper
maps out the reverse logistics program, and identifies
the different procedures directly or indirectly involved in
returns management. Simultaneously, written rules and
standard procedures are provided to guide execution from
the whole reverse logistics process (i.e. return generation,
receiving and inspection/separation, and re-processing the
returns). Companies and actors involved (manufacturers,
retailers, wholesalers, distributors, agents, resellers and
third-party logistics providers) can set up or improve their
own formalization system based on the theoretical structure
proposed. By pinpointing the corresponding rules to each
procedure, the framework motivates relevant customers
to actively participate in reverse logistics as formalization
affords a better communication platform. Also the
theoretical framework articulating characteristics of reverse
logistics system itself, may contribute to enable academics
to develop better formalization frameworks.
The theoretical model is proposed according to existing
studies and literature resources, which is limited to just
theoretical and methodological considerations. We posit
that formalized RL process will help firms to accomplish
their goals by facilitating a more efficient flow of goods from
the point of consumption to the point of origin. Therefore
we encourage additional research aimed at helping firms to
formalize their RL operations (Hall et al.,2013)few research
efforts have examined appropriate metrics for reverse
logistics (RL. A qualitative investigative technique is needed
to extend understanding regarding the relationship between
formalization and reverse logistics program performance at
the executive level.
Future research in reverse logistics needs to focus on a
quantitative empirical study that proposed relationships
between the degree of process formalization and reverse
logistics program performance. Another interesting
possibility for enhancing generalizability is to develop a
perceptual instrument for measuring the degree of process
formalization (Genche, 2007).
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Volume 13, Número 2, 2016, pp. 160-172
DOI: 10.14488/BJOPM.2016.v13.n2.a3
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